N-Acetylaspartylglutamate (NAAG) is the most abundant and widely distributed peptide transmitter in the mammalian nervous system. NAAG activates the metabotropic glutamate mGlu(3) receptor at presynaptic sites, inhibiting the release of neurotransmitters, including glutamate, and activates mGlu(3) receptors on glial cells, stimulating the release of neuroprotective growth factors from these cells. Elevated levels of glutamate released from neurons are associated with the pathology of stroke, traumatic nervous system injury, amyotrophic lateral sclerosis, inflammatory and neuropathic pain, diabetic neuropathy and the schizophrenia-like symptoms elicited by phencyclidine. NAAG is inactivated by specific peptidases following its synaptic release. Novel compounds that inhibit these enzymes prolong the activity of synaptically released NAAG and have significant therapeutic efficacy in animal models of these diverse clinical conditions. In this review, we summarize recent studies in these animal models and discuss the mechanisms by which NAAG peptidase inhibitors achieve these effects.